Millions more will be left hungry as food prices rise

MomingZhou

SAN FRANCISCO (MarketWatch) -- Sustaining high food prices will throw millions more people into hunger, the United Nations said in a recent report.

World food prices, which are now more than 50% higher than a year ago, are unlikely to return to low levels, and poor countries are expected to pay 40% more this year than a year ago to feed their people, the U.N Food and Agriculture Organization said in a report released Thursday.

"Food is no longer the cheap commodity that it once was," said Hafez Ghanem, FAO assistant director-general, in a news release. "We are facing the risk that the number of hungry will increase by many more millions of people."

The report, the FAO Food Outlook, indicates that food import bills of the Low Income Food Deficit Countries, or 85 countries that cannot produce or import enough food to feed their population, are expected to reach $169 billion in 2008, 40% more than in 2007 and four times more than 2000.

But soaring food prices and the number of hungry people won't necessarily mean the return of Malthusian Catastrophe, which insists that human populations would always be checked by the failure of food supplies to keep pace with growing population.

"We don't share the pessimistic view," said Abdolreza Abbassian, an economist at the FAO Trade and Markets Division, speaking from the agency's headquarters in Rome.

"In the short term, perhaps millions will suffer," Abbassian added. "But that is the short term. If we do our homework properly, then we hopefully do not have to see more people in hunger."

The world has seen dramatic rise in food prices in 2007. A food price index compiled by the FAO soared more than 40% last year. It has already increased 17% this year.

The FAO said in an earlier report that global prices of most agricultural commodities have started to ease in April but overall, price declines will be very limited and food prices will remain at high levels. See full story.

The World Bank recently said 33 countries are facing food crises. Robert Zoellick, president of the World Bank, and the U.N. World Food Program appealed to the international community to donate $500 million to help countries hit by high food and energy prices.

President Bush ordered a $200 million emergency food aid last month to help countries beset in hunger in Africa and elsewhere.

"While many worry about filling their gas tanks, many others around the world are struggling to fill their stomachs. And it's getting more and more difficult every day," Zoellick said last month in a speech.

The international community has to take united actions to bring food prices lower and prevent more people from starving, said Abbassian. Those actions include removing export restrictions, more investment in agriculture, and encouraging farmers to grow more food.

The latest outlook of world food production raised hopes that the world can feed itself. Cereal production in 2008 will reach a record, the FAO said. Tight wheat supply is likely to improve the most.

Global wheat production for the 2009 crop year is projected at a record 656 million tons, up 8% from the previous season, according to a report released earlier this month from the U.S. Department of Agriculture. Higher production is projected for most of the world's major exporting countries, including Australia, Canada, the European Union countries and Russia.

The USDA is also projecting a rise in rice output. Beef, chicken and pork production this year is expected to rise to the highest in at least a decade.

But despite record production levels, "tight markets will probably lead to continued price volatility," the FAO said.

In a testimony to the Joint Economic Committee of the Congress, Joseph Glauber, chief economist of the USDA, listed several key factors that have been pushing food prices higher, including world economic development, global weather, rising input costs for energy, international export restrictions, and biofuels production.

Retail food prices will increase at least 4% in the U.S. this year, Glauber said.

Futures of major crop commodities, including wheat, corn, and soybeans were on the rise on Friday on the Chicago Board of Trade.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.